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Palau, Mongolia and Taiwan in the Dock


What’s inside?

    Last week, the U.S. Treasury designated a Taiwanese shipping network engaged in Ship-to-Ship (STS) transfers with North Korean vessels. They were smuggling fuel into the DPRK.

    The designations applied to two Taiwanese individuals and three shipping companies; the U.S. also identified the vessel Shang Yuan Bao as blocked property for two incidents of dark STS transfers in the first half of 2018, delivering petroleum products to North Korean ships offshore Taiwan.

    Flags Up 003
    Number of “dark” activities off Taiwan during past six months. Source: Windward

    The Shang Yuan Bao had been inactive for the better part of the past year after being named by the UN Security Council in a report on October 2018. Yet a larger network of similar operations is thriving. Over the past six months, 112 tankers turned off their AIS transponders and went “dark” for more than four days in the same area where the Shang Yuan Bao had previously operated (see image above). More than 80% of them did it more than once during the period (and most of them had been going “dark” for some time before):

    Flags Up 002
    Shang Yuan Bao Operations off Taiwan. Source: Windward

    But perhaps the standout feature of this operation is the flags flown by the tankers involved: more than a third were registered in Sierra Leone; 17 in landlocked Mongolia; and 13 in the Pacific archipelago of Palau. This is not a “random sample” of the world tanker fleet; the Sierra Leone tankers account for almost half of all Sierra Leone-flagged tankers active in the world; for Palau, they’re one-third of the island nation’s tanker fleet; for Cook Islands, one-fifth (see image 3).

    Flags Up 001
    Flags flown by tankers operating like the designated Shang Yuan Bao. Source: Windward

    Such high concentrations of the same flags are often a sign of a strong operational network and modus operandi. This network potentially exposes businesses across the maritime supply chain for taking part in, or unwittingly facilitating, this sanctioned trade. The U.S. isn’t bluffing: “Treasury will implement and enforce existing U.S. and UN sanctions on individuals, entities, and vessels involved in illicit ship-to-ship transfers with North Korean flagged vessels,” said Treasury Under Secretary Sigal Mandelker. “Shipping companies trading with North Korea are exposing themselves to significant sanctions risk, despite the deceptive practices they try to employ.”

    Omer Primor is Head of Marketing at Windward


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